Unit 3 : Chapter 6
The Journal and Source Documents
•Chapter 6 Quiz will be on October 24 (Friday)
The General Journal
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Just as people write diaries to record their
experiences, thoughts, feelings, facts and
details, accountants also use diary called,
“General Journal” to record facts and details of
a business transactions.
Accountants write down on General Journal all
the things that they should remember for a long
time.
So far, we used T accounts whenever we
recorded transactions.
The General Journal
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It is easy to use T accounts when the
transactions are simple such as one debit entry
and one credit entry.
In reality, many transactions consist of many
accounts, so we have to record the transactions
first in the General Journal. (or Journal or
Journal Entry)
General Journal is a notebook in which
accounting entries are first recorded
The General Journal
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Each transaction is recorded separately in
chronological order.
Usually there is a blank line between two
transactions.
GJ is also referred to as the book of original
entry
 Each transaction is recorded
a) separately
b) in the order that they occur
It provides a continuous record of all
transactions
The First 6 Steps in the
Accounting Cycle
1 Transactions
occur.
4 Trial Balance
2 Transactions
are recorded in
the journal in
order by date.
5 Adjusting
Entry
3 The accounting
entries are
transferred to the
ledger accounts.
(or T accounts)
6 Balance Sheet
and Income
Statement
The Two-Column Journal
1. Year recorded at the top of column.
2. Month recorded once with days noting business
transactions.
3. Account titles are always capitalized.
4. Explanations are brief but tell ‘the story’.
5. Debits are always recorded first.
6. Credit particulars are always indented.
7. The completed journal entry must balance.
8. Leave a blank line before next entry.
The Steps in Recording a Journal Entry
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Step 1: Date: Enter the day in the date column (second
column)
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Step 2: Debit Accounts: Enter the name of the
accounts, which is to be debited. Enter the amount in
debit column.
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Step 3: Credit Accounts: Enter the names of the
accounts which is to be credited. They are indented
about 1.5 cm. Enter the amount in credit column.
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Step 4: Explanation: Write a brief explanation for the
entry beginning at the left side of the “Particular”
column on the line beneath the last credit item.
Example of a Journal Entry
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Let’s say that on Feb 1, you sold your accounting service to
your existing client for $180. Customer did not pay on the
same date, but she paid on Feb 15 instead.
What are the journal entries?
Date
Particulars
PR
Debit Credit
Feb 1
AR
180
Service fee(Rev)
180
Sold tax return service to Mr. Smith
15
Bank
180
AR
180
Received money from Mr. Smith Invoice 123
Notes about recording
a Journal Entry
Year recorded at the top of column.
2. Month recorded only once with days noting business
transactions.
3. Account titles are always capitalized.
4. Explanations are brief but tell ‘the story’. (What
happened?)
5. Debit accounts are always recorded first.
6. Credit accounts are always indented.
1.
Notes about recording
a Journal Entry
7. The completed journal entry must balance.
(=> total debit amounts = total credit amounts)
8. Leave a blank line before next entry.
Class Activity
Other groups can make a skit, rap song, poem or a sample
journal by using chart paper, demonstrating that you can
make a journal entry! You can even teach the class with
your activity.
Create :
1. Group Name
2. Who plays which role?